This House Believes…The Government’s VISA Changes Will Be Bad For Britain’s Economy

The Government recently announced plans to change how the UK’s VISA system works. The chief impact of this will be to block low-skilled migrants from coming to the UK. 20,700 ‘Tier 2’ General VISAs will be made available annually, divided into monthly installments. It seems that ‘Tier 1’ Exceptional Talent VISAs will be issued solely on a case-by-case basis. This is despite basic flaws in centrally-calculated economic sums.

Knowledge
about immigration is, perhaps paradoxically, local in nature. It therefore
exists mainly outside the knowledge of any central government or authority. Net
immigration exists, as a statistic and to a lesser degree as a general debate,
as an abstraction from individual context by sum addition. Whilst this can be a
useful intellectual work-around when discussing general principles or debating
it on television, it is illiterate to deploy it within practical economic
policy. Every immigrant is surrounded by their own set of circumstances, as
well as their own unique talents and knowledge. As a consequence of this, the
Johnson government could never attain enough worthwhile knowledge of each and
every individual. As such, they could never hope to forge a completely fool-proof
economic plan. Setting a hard limitation, on a first-come-first-served basis, is
a rapid and dangerous way to end up with a multitude of individual economic misallocations.
Johnson’s plan could never either predict or effectively combat these issues.

In order to successfully calculate what the economy requires, there needs to be deeply detailed co-ordination between those planning it. The basic info needed for such co-ordination is usually local, temporarily valuable and difficult to compare between different cases. It’s not made easier to compare of people who can’t agree on what is valuable. What a prospective immigrant is valuable about their potential contribution to Britain, and what Johnson’s government thinks is valuable, maybe radically different.

This is the essence of the problem with the government’s proposals. People coming to this country may well have a very different understanding of what they can bring to Britain than the government’s tick-boxes. The VISA system prevents effective communication between these two parties and thus any sort of coordination between Home Office policy and prospective migrants. The government’s policy, pax Pink Floyd, makes each immigrant just another brick in the wall either facing in or out of Britain. It neglects the unique personality and potential contribution of every individual.

Subjectivity comes to the heart of the government’s problem. Who decides what the country needs? Central government? UK businesses? Voters at the ballot box every five year? Immigrants themselves? A quango? The day-to-day whims of Priti Patel? All these perspectives pulling in radically different directions mean that any simple conclusion of what’s best for Britain’s economy is impossible to arrive at. It’s amazing that a government that claims it represents a “People’s Government” has no idea just what sort of people it’s referring to in one of its central policies.

Opposition – Jasper Evans

Before I begin, I would like to make clear that I disagree with this policy. For one, I find it emblematic of Boris ‘watermelon smiles’ Johnson’s attitude towards migration, and the larger ‘hostile environment’ attitude of the recent Conservative party. Perhaps more importantly, as the son of an immigrant, I would like to be allowed to come back home in the next vacation.

So I disagree with this policy with my heart, but that doesn’t mean my wallet can not see its potential benefits. I am not going to make the tired argument that migrants take up more tax money then they produce, which despite its aggressive disconnection with the truth still manages to trundle out once in a while on Question Time. Instead, I am going to posit that in the long run, a decrease in low-paid migration may be the solution to the British economy’s greatest weakness, productivity.

The British economy is stunningly unproductive. It lingers at the bottom of the G7 table, more than 30% lower than the United States and 10-15% lower than Germany, France or Sweden. Productivity, a measure of the amount of GDP produced per hour, is vitally important to economic growth. As Nobel prize winner Paul Krugman states : ‘productivity isn’t everything, but in the long run it’s almost everything’.

The government policy will (if implemented fully) vastly limit the number of migrants coming to the U.K. Especially low-paid low-skilled workers, who will be banned altogether. This will lower the number of working people in the U.K. and as any first year PPEist should be able to tell you, less supply with the same demand leads to a higher price. Wages will rise.

This may well, in the short run, be detrimental to the U.K. economy. Higher wages mean higher costs and some firms may not be able to compete. However, in the long run, firms will see higher wages as an incentive to invest in their workers. The ratio of the cost of labour to the cost of capital (machines, computers etc) will increase, and so other methods of increasing the amount produced in a firm will become more attractive. This will lead firms to invest more in machines, in training and in emerging technologies such as AI. This investment will allow each worker to produce more goods or services in the same amount of time. Productivity will rise.

At the same time, higher wages for workers and higher costs for firms will mean the economy will level out. Workers will become more valuable and receive a higher cut of revenues, while lower profits (at least in the short run) will limit the growth in wealth of the super-rich. The policy could lead to a more egalitarian society. In other words, the new Conservative policy may solve the productivity crisis and create a more egalitarian society. If it wasn’t such a morally distasteful thing to do, it would be a brilliant idea.